CBRE Group: Earnings Preview

CBRE Group Inc. (NYSE:CBG), the world's largest commercial real estate services firm in terms of 2011 revenue, is scheduled to report its fiscal 2012 first quarter earnings after the market closes on April 24, 2012. The current Zacks Consensus Estimate for the first quarter is 13 cents per share, representing a year-over-year increase of about 3.08%.

Fourth Quarter Recap

CBRE Group reported fourth quarter 2011 revenues of $1.8 billion compared with $1.7 billion in the year-earlier quarter, reflecting an increase of 7%. The revenues in the reported quarter missed the Zacks Consensus Estimate of $1.9 billion.

The company reported a net income of $79.8 million or 25 cents per share during the quarter, compared with $95.1 million or 30 cents in the year-ago period. Excluding non-recurring items, CBRE Group reported a net income of $149.3 million or 46 cents per share during the quarter compared with $115.4 million or 36 cents in the year-earlier quarter. The fourth quarter 2011 recurring earnings surpassed the Zacks Consensus Estimate by 2 cents.

For full year 2011, the company reported revenues of $5.9 billion compared with $5.1 billion in 2010, reflecting a year-over-year increase of 15%. For fiscal 2011, the company reported a net income of $239.2 million or 74 cents per share, compared with $200.3 million or 63 cents in 2010. Excluding non-recurring items, CBRE Group's net income increased to $334.5 million or $1.03 per share, compared with $239.8 million or $0.75 in the previous year. The fiscal 2011 recurring earnings beat the Zacks Consensus Estimate by 2 cents.

Agreement of Analysts

In the last 30 days, 1 out of 5 analysts covering the stock raised the earnings estimate for fiscal 2012, while none revised the earnings estimate downwards. For fiscal 2013, 1 out of 4 analysts covering the stock had increased their earnings estimates in the last 30 days, while none went for any decline. This represents that the analysts are a tad bullish about the long-term earnings prospects of the company.

Magnitude of Estimate Revisions

For the first quarter, earnings estimates have remained steady in the last 7 days at 13 cents. Earnings estimates for fiscal 2012 have also remained stagnant in the last 7 days at $1.23 per share. For full year 2012, CBRE Group expects recurring earnings in the range of $1.20 to $1.25 per share.

Our Recommendation

CBRE Group is the global market leader in commercial real estate brokerage and advisory services for property leasing and sales, forecasting, valuations, origination and servicing of commercial mortgage loans, as well as project and real estate investment management. The company has a broad range of real estate product and services, and an extensive knowledge of domestic and international real estate markets that enables it to operate as a single-source provider of real estate solutions.

The gradual revival of the overall economy, albeit at a tepid and inconsistent pace, has enabled the company to drive its growth engine and management further expects to continue the momentum in 2012 as well. We also remain encouraged by indications of stabilization and recovery of market conditions.

We maintain our 'Neutral' recommendation on the stock, which presently has a Zacks #1 Rank that translates into a short-term 'Strong Buy' rating. However, we have an 'Outperform' recommendation and a Zacks #3 Rank (short-term 'Hold' rating) for Jones Lang LaSalle Inc. (NYSE:JLL), one of the competitors of CBRE Group.